Illinois pauses data center tax credits amid opposition

This decision aligns Illinois with Ohio, which also paused its data center tax incentive program on Wednesday pending a study of their economic impact. The pause in Illinois comes amid a broader trend of increasing opposition to data center developments across the United States, with approximately $64 billion in projects reportedly delayed or canceled due to community pushback over fears of increased water and energy costs. A notable instance in Illinois was the Naperville city council's rejection of a proposed data center in January.

The governor's order places him at odds with organized labor, a key Democratic constituency. Unions, represented by groups like Climate Jobs Illinois, support the tax breaks as they facilitate job creation for their members in constructing these facilities. They argue that the pause will not lower utility bills but will instead drive investment and jobs to neighboring states like Indiana, Kentucky, and Ohio. The pause does not affect data center agreements established before July 1, and companies can still pursue local tax relief. Between 2020 and 2024, Illinois provided nearly $1 billion in state tax incentives for data centers, attracting over $15 billion in investments.